The UK and Ireland branch of the New Patriotic Party (NPP) deems it unacceptable and highly offensive to Ghanaians that the NDC-Mills government should ignore all the numerous advice from oil experts and voices of reason that the defective export flow meters on the FPSO vessel would definitely short-change Ghana if immediate steps are not taken to replace them within shortest possible time.
Instead the Mills-Mahama government has chosen to collude with the GNPC and the contractors at the Jubilee Oil Field to continue to lift the crude oil from Ghana without the flow meters and in a manner that can only give rise of false accounting.
It is highly unfathomable for the Energy Minister Dr Oteng Adjei to announce publicly that there are faults with the export flow meters on FPSO Kwame Nkrumah vessel, and therefore the flow meters have been removed for calibration and yet the government of Ghana allows crude to be lifted everyday from FPSO without accurate meter readings, contrary to Article 11 of the 2004 Oil Agreement between Ghana Government and Kosmos. The facts relating to the defective flow meters have also been confirmed by the Director of Exploration and Production at GNPC Thomas Manu, who went to state that the meters would not be refitted until the end of July 2011 when the calibration would have been completed.
It has emerged that the Ghana National Petroleum Corporation (GNPC) and the Ministry of Energy, the two regulators in the industry, have been using a system called ullaging, in which a dip stick or ruler is used to manually calculate the amount of oil meant for export after the flow meters were deliberately removed from the vessel.
We, the Ghanaians in UK and Ireland feel scandalised and shocked to learn that the officials of the Ghana Revenue Authority and customs officers are not allowed to accompany the tankers to take records of the quantity of oil being exported, in light of the flow meters reported not working.
It can never be accepted that the representatives of the buyers should rather furnish the revenue agencies in Ghana with figures on the amount of oil exported. This threatening indiscretion and lapses with Ghana crude oil will never be tolerated in any disciplined and competent administration.
We can confidently state that the current happenings with our oil is tantamount to a total colossal breach of Article-11 in the contract agreement signed in 2004 between Ghana govt and Kosmos (the parent contractor), which agreed on the use of the Ultrasonic Flow Meters as the only device that must be used to independently monitor how much crude oil is produced and exported from the Jubilee oil Filed, and in an event of a defective meters discovered, the contractor (Kosmos) shall inform GNPC and the contractor take immediate steps to repair and replace such appliance at the presence of GNPC or its authorized agent.
The unfortunate thing happening today is that the GNPC, which is supposed to be the watch dog to ensure a productive operations and efficient measurement and pricing of petroleum under Article-11 of the contract agreement, have resorted to diligently lying to Ghanaians on behalf of the oil buying companies and the contractors at the jubilee field that “the metering system onboard the FPSO vessel is electronic, comprehensive, effective and accurately designed to automatically detect and compensate for any defects that occur in any of its parts”; just as if the meters are still in place.
We consider this as unacceptable and therefore want to explicitly urge the GNPC and Kosmos (the parent contractor) to ensure that the Ultrasonic Export Flow Meters on FPSO vessel are refitted and inspected by Ghana revenue authority and Ghana Standard Board within two weeks if they want to avoid the wrath of a court action that would be filed in Ghana against them.
The Article-11 of the 133 pages contract agreement signed between Ghana govt and Kosmos in 2004 has stipulated categorically that:-
11.1 Crude Oil shall be delivered by Contractor to storage tanks or other suitable holding facility constructed, maintained and operated in accordance with applicable laws and good international petroleum industry oilfield practice (e.g. American Petroleum Institute) under the same or similar circumstances. Crude Oil shall be metered or otherwise measured for quantity and tested for quality in such storage tanks or other facility for all purposes of this Agreement. Any Party may request that measurements and tests be done by an internationally recognized inspection company. Contractor shall arrange and pay for the conduct of any measurement, or test so requested, provided however, that in the case of (I) a test requested for quality purposes and (2) a test requested on metering (or measurement) devices where the test demonstrates that such devices are accurate within acceptable tolerances, the Party requesting the test shall reimburse Contractor for the costs associated with the test or tests.
11.2 GNPC or its authorized agent shall have the right:
a) To be present at and to observe such measurement of Crude Oil; and
b) To examine and test whatever appliances are used by Contractor.
11.3 In the event that GNPC considers Contractor’s methods of measurement to be inaccurate, GNPC shall notify Contractor to this effect and the Parties shall meet within ten (10) days of such notification to discuss the matter. If after thirty (30) days, the Parties cannot agree over the issue they shall refer for resolution under Article 24, the sole question of whether Contractor’s method of measuring Crude Oil is accurate. Retrospective adjustments to measurements shall be made where necessary to give effect to the decision rendered under Article 24.
11.4 If, upon the examination or testing of appliances provided for in Article 11.2, any such appliances shall be discovered to be defective:
a) Contractor shall take immediate steps to repair or replace such appliance; and
b) Subject to the establishment of the contrary, such error shall be deemed to have existed for three (3) months or since the date of the last examination and testing, whichever occurred more recently.
11.5 In the event that Contractor desires to adjust, repair or replace any measuring appliance, it shall give GNPC reasonable notice to enable GNPC or its authorized agent to be present.
11.6 Contractor shall keep full and accurate accounts concerning all Petroleum measured as aforesaid and provide GNPC with copies thereof on a monthly basis, not later than ten (10) days after the end of each month.
This point in the contract is a recognised Planned Preventive Maintenance (PPM) system practiced in many processing and engineering maintenance firms used to prompt the technical team of any developing fault in a system before a catastrophic failure occurs, but unfortunately, our source at the offices of GNPC has said ‘this part of the contract (article 11.6) has also been flouted from day one since the start of production. The contractors at the Jubilee Field have failed to provide GNPC with copies of full and accurate accounts concerning all petroleum measured and metering accuracy on monthly basis.
Now, with the passage of the Petroleum Commission Act by Parliament on Wednesday 1st June 2011, in accordance with article 269 of the 1992 Constitution, paving way for an establishment of petroleum commission to oversee the regulation and management of the petroleum products and co-ordination of the policies in relation to resources, we can only hope that our concerns raised today would be considered serious by the government and the GNPC board in good faith.
We are therefore giving GNPC and Kosmos the ultimatum to suspend all oil exports from the Jubilee Field till the meters are calibrated and refitted; alternatively they should replace the Export Flow Meters on FPSO vessel within 14 days or face the wrath of court action in Ghana.
We therefore urge President Mills to instruct the GNPC and its agents or operators to ensure that Article 11 of the agreement is adhered to.
Source: Hayford Atta-Krufi Chairman - NPP UK & Ireland Communication and Research Committee
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